A lingering chemical raw materials shortage triggered by Hurricane Harvey has the potential to temporarily halt production at some of Louisiana’s chemical plants if it lasts long enough, experts said Friday, while another downplayed the likelihood.
A Friday report from financial services firm IHS Markit shows more than 50 percent of the country’s ethylene production is offline and that it could be weeks before those plants return to pre-Harvey production levels. Financial consultants Jefferies predicts November.
“The risk they face is that Louisiana doesn’t produce very much in the way of those natural gas liquids so it all comes from points west via pipeline,” said Eric Smith, associate director of Tulane University’s Energy Institute.
If the pipelines or the natural gas processing plants are disrupted, Louisiana’s chemical plants could take a hit, Smith said. Right now, the chemical plants in Lake Charles and along the Mississippi River are probably running on existing inventory.
At some point that supply will run out; the hope is the plants in Texas get back online soon enough to prevent that, Smith said.
David Dismukes, executive director of the LSU Center for Energy Studies, said short-run disruptions are to be expected because the hurricane jammed up the entire supply chain.
The refineries and industrial plants were the one part of the economy that seemed to know what they were doing when it came to the hurricanes, he said. While major issues with housing and rebuilding dragged on for months and even years, restarting the plants and reorienting the supply chain happened quickly.
“There are some days of supply there so that they can probably manage for a while. How long exactly is not 100 percent clear,” Lewandowski said.
Normally, plants keep 10 days of inventory on hand. Smaller plants may store less, while larger facilities may keep more, Lewandowski said. There are other sources of natural gas liquids, such as pipelines from Dow and Shell, that could help. In order for that to happen, the Houston plants have to come online.